Grindrod aims to have its logistics hub in Palma, in northern Mozambique, “up and running” by the end of the first half of this year, says Grindrod Freight Services CEO Xolani Mbambo.
Palma is currently a focal point in terms of oil and gas developments in this part of the country.
Mbambo says the establishment of the logistics hub was postponed owing to insurgent activity in the region last year.
“We have since decided to continue with construction.”
The logistics hub will include fuel and container depots, while also catering for some engineering services.
Grindrod CEO Andrew Waller notes that French energy giant Total, which is developing a liquid natural gas project in the region, in December scaled down from 4 000 people on site, to 1 600 people, owing to rising security threats.
He says Mozambique has to address these long-standing and deep-seated security threats from religious insurgents “as a country”.
“We operate into northern Mozambique under the auspices of Total – they control the area under their watch,” notes Waller.
“Total has a significant security presence; there are many governments involved. But of course, we would love there to be a solution.
“We have scaled down a few people in that area, but we are largely the only means to get product into that region, as you cannot use truck transport.
“Our ships are highly critical to bring in fuel, food and water, as well as construction material. So far, we haven’t been involved in any skirmishes. We are in a secure zone Total has set out, and which is patrolled by various security forces.”
Grindrod operates seven ships into the region, all able to land on the beach.
The growth prospects for Grindrod in northern Mozambique remain “very exciting”, says Mbambo.
“From here we want to push on and entrench ourselves up east, to unlock Nacala, Zambia, Malawi and Mozambique. This really talks to Grindrod’s strategy to unlock trade corridors.”
Grindrod on Thursday reported its financial results for the year ended December 31.
Revenue from core operations declined by 1%, to R4.7-billion, compared with the previous financial year.
Trading profit from core operations stayed fairly flat, at R1.4-billion.
Core operations include ports and terminal, logistics and the company’s bank.
Businesses that Grindrod is in the process of selling include Senwes, with the deal expected to be wrapped up in March.
Marine Fuels, however, has proved more difficult to sell, with Waller noting that Grindrod remains committed to exiting this business.
Looking ahead, Waller says Grindrod has seen a strong recovery in the commodity and container market in the second half of the financial year, and that this trend is expected to continue into this year.